Treasury officials, in the first comprehensive tally of permanent modifications made, say that loan servicers have converted 31,382 people from trial adjustments to long-term assistance as of Nov. 30, but 30,650 people in trial modifications have been denied. That means that only about 4% of troubled borrowers have received long-term help under the Obama administration’s foreclosure prevention program. A nearly equal number of trial modifications have been denied permanent assistance, the report showed. The reasons include not making monthly payments on time, not submitting all the necessary paperwork and not qualifying for reasons such as insufficient income.

Homeowners claim that banks keep losing paperwork, but banks claim they often don’t get it in the first place. Around 375,000 people should be eligible to receive long-term relief by year’s end, but only one-third of homeowners who have made at least three trial payments have submitted all the needed forms, Treasury officials say, and some 20% have not submitted any paperwork at all. Banks and government agencies have hired outside companies to knock on borrowers’ doors to assist them with completing the paperwork. None of this addresses the real problems, of course: a lot of people are underwater and don’t see the point of making payments, and quite a few know they won’t qualify once their real income comes to light.

Treasury released the highly-anticipated progress report on the government’s foreclosure prevention program Thursday afternoon – which for the first time includes details on the number of trial modifications each servicer has converted to permanent status – and as lenders warned earlier this week, the results were disappointing.

Of the more than 728,000 Home Affordable Modification Program (HAMP) trials under way across the country, 375,000 are scheduled to convert to a permanent modification by the end of the year, and only 31,382 have made the transition.

The Treasury Department said in a statement to the press, “According to servicer reports, most borrowers in modifications are meeting their responsibilities to make their payments. Servicers need to do their part to help borrowers complete the process and get to the finish line.”

A number of servicers have told DS News that the problem lies in the paperwork. They say an unsettling number of borrowers just don’t submit the required documentation for conversion once they complete the trial phase, or file incomplete or inaccurate information. Participating servicers say they’re ramping up outreach efforts to ensure homeowners who’ve successfully completed their trial phase get the necessary documents in for permanent assistance.

Molly Sheehan, SVP of housing policy for JPMorgan Chase’s home lending division told a congressional panel earlier this week that the focus of her group’s “immediate attention is finding ways to assist the 51 borrowers out of 100 that are missing some or all of the documentation.”

But on the other end of the process, homeowners and their advocates say it’s the servicers and their staff that cause the delays, and in some cases, even lose the paperwork.

Julia Gordon, senior policy counsel for the Center for Responsible Lending, testified to lawmakers Tuesday that servicers still lack the capacity to effectively administer a program of HAMP’s size and scope. It’s been nine months since HAMP began, and Gordon said, “Homeowners still have terrible trouble reaching their servicers, and when they do, they often encounter staff who are ignorant of the HAMP program, they sit through attempts to steer them into other products, and they are unable to get any firm decisions made in a timely manner.”

Timra Valentyne, a loan officer with United Homestead tells DSNews.com that she’s encountered similar problems helping homeowners work with their servicers on HAMP modifications. On numerous occasions, Valentyne said, the borrowers’ documentation gets lost in the shuffle or never gets tagged for the appropriate account.

She cited a particular case with Chase, in which the homeowner had successfully made his restructured payments through five months of a HAMP trial, but was denied a permanent modification because he cashed in a certificate of deposit (CD) to help cover the new payments and the bank ruled his hardship was only temporary. When Valentyne followed up with Chase, the bank representative told her the homeowner was never on the HAMP plan, although the homeowner had a rejection letter stating that he’d been denied for the “Making Home Affordable” modification program – a clear discrepancy in records and paperwork.

Gordon advocates requiring HAMP-participating lenders who are producing insufficient results to use specialty servicers working for the government to handle certain accounts. These companies specialize in intensive, “high-touch” approaches to working with homeowners in trouble, she says, and are much more effective at reaching borrowers than a mainstream servicer.

One specialty servicer says it’s exactly this type of high-touch method that has led to its HAMP success. Ocwen Financial has converted an industry-leading 74 percent of its trial mortgage modifications to permanent status. The Treasury’s latest HAMP report shows that Ocwen accounts for a disproportionately high 13.5 percent of all permanent modifications completed to date even though it services only 2 percent of the estimated HAMP-eligible loans.

Ocwen says its partnerships with homeowner advocacy groups have been indispensible in helping the company keep borrowers active in the process. Ocwen collaborates with a range of independent housing advocacy and grassroots organizations to reach out to homeowners and to help them gather the required documents for a modification.

Based on the December HAMP report GMAC Mortgage is having the most success with permanent modifications in terms of sheer numbers. GMAC has successfully made the conversion for 7,111 homeowners. The company has extended trials to 39 percent of its eligible borrowers.

Bank of America had the worst showing of all the largest lenders. It has finalized a mere 98 permanent modifications, and has extended trial offers to only 15 percent of its more than a million eligible homeowners.

The administration recently announced a new push to compel servicers to complete more permanent modifications, threatening to impose fines, withhold cash incentives, and publicly name those companies that fail to perform up to par